The Internal Revenue Service (IRS) asked thousands of tax-exempt organizations on Monday to file their returns ahead of the deadline next week.
Although tax-exempt organizations are excluded from income taxation, they are generally required to file annual returns detailing incomes and expenses.
“The annual filing due date for certain returns filed by tax-exempt organizations is normally by the 15th day of the 5th month after the end of an organization’s accounting period,“ the IRS said in a May 6 press release. ”Those operating on a calendar year (CY) basis must file a return by May 15.” Returns that are due by the date include forms 990, 990-EZ, 990-PF, 990-N, 990-T, and 4720.
Electronic filing is mandatory for certain organizations and provides a “fast acknowledgement that the IRS has received the return and reduces processing time, making compliance with reporting requirements easier.”
Establishments filing forms 990, 990-EZ, 990-PF, or 990-T for the calendar year “must file their returns electronically,” the IRS said. Private foundations filing a Form 4720 for this period should also do electronic filing.
Organizations eligible to file Form 990-N must do it online as well. Meanwhile, charities and other tax-exempt companies can file these forms electronically through an IRS-authorized e-file provider.
“If a due date falls on a Saturday, Sunday, or legal holiday, the due date is delayed until the next business day,” the IRS states. Since May 15 falls on a Wednesday this year, there will be no change of the due date.
In case an organization requires more time, they can do so by filing Form 8868, Application for Extension of Time to File an Exempt Organization Return, and seek a six-month automatic filing extension. This will delay the filing until Nov. 15.
However, “in situations where tax is due, extending the time for filing a return does not extend the time for paying tax,” the agency clarified.
Tax-exempt groups must mention the forms for which an extension is being sought as well as “state in detail why you need the extension.”
The IRS asked organizations to “review their forms for accuracy and to submit complete returns,” warning that “if an organization’s return is incomplete or the wrong return for the organization, the return will be rejected.”
For instance, establishments should make sure they use the appropriate Form 990 for the tax period. “Penalties may be assessed for failing to file the proper version of Form 990 for the tax period of the return.”
Filers should check the accuracy of their employer identification number, tax period, and group exemption number. When mentioning the Internal Revenue Code Subsection for the organization, it must match the code as indicated in the determination letter.
A determination letter is issued by the IRS if an organization’s application for tax-exempt status and supporting documentation establishes that it fulfills the requirements to be granted that status.
Those who file Form 990 must ensure they fully complete all parts from 1 through X1 of the form. A proper signature has to be present in Part II, the Signature Block.
“An officer of the organization must sign the return. For a corporation or association, this officer may be the president, vice president, treasurer, assistant treasurer, chief accounting officer, or tax officer. For a trust, the authorized trustee(s) must sign.”
The IRS pointed out that Form 990 has to be made publicly available by both the agency and the filer. As such, it advised against including unnecessary personally identifiable details. “Putting personal identifying information not required by the IRS on the return facilitates identify theft,” the agency warned.
A tax-exempt status is not the same as a nonprofit. Organizing an entity as a nonprofit at the state level would not automatically give the establishment exemption from federal income tax. To gain such exemption, the nonprofit must meet the requirements set forth in the Internal Revenue Code.
“To be recognized as exempt from federal income taxation, most organizations are required to apply for recognition of exemption,” the IRS stated.
